Tri-State Specialists: Cosmetic Surgery, Flap Codes and Upcoded Office Visits

In the Tri State Specialists cosmetic billing settlement, the Sioux City physician group agreed to pay $612,501 to resolve allegations of billing government health care programs for cosmetic surgery presented as medically necessary, overstated surgical procedures and upcoded office visits. If you worked with those patients or claims, you may have seen where the bill stopped matching the care.

The Justice Department announced the settlement on January 20, 2022. The government alleged that Tri-State submitted false claims to Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program for a former plastic-surgeon partner’s work from August 2014 through August 2019. The agreement called for payment to the United States, Iowa and South Dakota.

Cosmetic Procedures Billed as Medically Necessary

The government alleged medical necessity fraud involving cosmetic panniculectomies, abdominoplasties and breast reductions billed as medically necessary procedures. Abdominoplasties are also known as tummy tucks. A separate whistleblower complaint against Tareen Dermatology alleged that staff were instructed to use diagnoses needed for coverage regardless of the patient’s actual presentation.

The Robert Wood Johnson Foundation’s 2008 synthesis, Physician Self-Referral and Physician-Owned Specialty Facilities, described most cosmetic surgery as paid for by patients out of pocket, outside Medicare and private health plans’ discounted prices. In the alleged scheme, presenting cosmetic work as medically necessary would put taxpayers on the hook for the bill. We see the absurdity in that switch: the label on a claim is being asked to supply the medical reason for the operation.

Flap Codes and Adjacent Tissue Transfer

The government alleged that the former partner did too little surgical work to justify the high-value muscle-flap and adjacent-tissue-transfer procedures billed by Tri-State. This procedure-upcoding allegation concerns what operation occurred. A separate complaint concerning Henghold Dermatology alleged that linear repairs were billed as flaps and the skin area involved in flap repairs was overstated. For Tri-State’s alleged flap claims, the corresponding question is what the surgeon actually performed and how that became the higher-value procedure on the bill.

Upcoded Office Visits

Tri-State’s office-visit allegation concerned services that allegedly fell short of the level billed. For that period, the government described higher-level visits as requiring a full examination, a full history and detailed records supporting moderately or highly complex medical decisions. The alleged office-visit upcoding concerned the work and documentation supporting the visit, alongside the separate allegation about the surgery billed. A separate complaint against Healogics alleged that records behind higher-level office claims showed only nurses changing or rewrapping wound dressings, without documentation of clinical work by a physician.

We examine what supports the office encounter’s level as well as what supports the surgery claim, using the requirements that applied when the care occurred. Tri-State’s settlement put both kinds of alleged overstatement in the same case.

The Practice and Its Former Partner

Tri-State Specialists was the partnership that agreed to settle over its former partner’s work. The government alleged that the practice was responsible for his billing because he worked on its behalf and Tri-State knew what he was doing. That knowledge allegation makes the practice’s own billing decisions part of the story alongside the surgeon’s clinical work. The Justice Department’s May 15, 2023 announcement of a separate civil complaint against the surgeon described allegations that he caused more than a thousand false claims, including claims for surgery he never performed.

The Department of Health and Human Services Office of Inspector General and the Department of Defense’s Defense Criminal Investigative Service investigated the Tri-State case. The Office of Personnel Management Office of the Inspector General and Iowa’s Medicaid Fraud Control Unit also investigated.

What Evidence Does a Whistleblower Need?

For these allegations, useful billing-fraud evidence connects the clinical reason for care, the work performed and the claim sent to the government. We compare the treatment record, operative description and visit documentation with the submitted codes, service dates and the people who performed the work. These are the questions we work through with you:

• The reason for surgery. What clinical indication supported the medically necessary procedure claimed, and how did that compare with the cosmetic work the patient received?
• The operation performed. What repair and measurements supported the flap or tissue-transfer code, and did those match the surgical record?
• The office encounter. What examination, history and decision-making documentation supported the visit level at the time?
• The practice’s decisions. Who selected or changed the codes, what did staff question, and what happened after those questions reached management?

Healthcare billing records need people who can explain them. The 2017 Journal of AHIMA article Busting Bad Medicine: A Call to Action Addressing Healthcare, Fraud, Waste, and Abuse puts that plainly:

Someone who saw the work or heard the explanation for a code can connect a claim to a decision inside the practice. That is the connection we work through with you when assessing a physician practice whistleblower case.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The Tri-State matter began with a whistleblower’s case, and the settlement announcement said that person would share in the United States’ financial recovery.

You Saw the Care Behind the Code

If you know how cosmetic work became a covered operation, a repair became a flap or a brief encounter became a high-level visit, talk with our whistleblower experts about the claims you saw. We build the case with you around the clinical work and the practice’s billing decisions, and bring in physician billing fraud whistleblower lawyers who understand surgical coding and medical necessity. We stay with you from the first conversation, building your strongest physician practice whistleblower case.